1 The Historical Context of Payments in IndiaFor over half a century following independence, the Indian economy was defined by its overwhelming reliance on physical currency. Cash was not merely a medium of exchange; it was a cultural fixture. In 2014, approximately 90% of all consumer transactions by volume were conducted in cash. This "Cash-King" status created several systemic bottlenecks that hindered modern economic growth:•The Cost of Cash Management: The Reserve Bank of India (RBI) and commercial banks incurred massive annual expenditures in printing, storing, transporting, and securing physical banknotes. Estimates suggested that the cost of managing cash was nearly 0.25% of India’s GDP.•The Shadow Economy: High cash usage allowed for a lack of transparency. Transactions remained off the books, leading to significant tax evasion and a large "black money" parallel economy that deprived the government of revenue for public welfare.•Financial Exclusion: A vast majority of the population, particularly in rural and semi-urban areas, remained "unbanked." Without a digital footprint, these individuals had no access to formal credit, insurance, or savings instruments, leaving them at the mercy of informal moneylenders.The transition toward a "Less-Cash" society began with the launch of the Digital India program in 2015. However, early electronic systems like NEFT (National Electronic Funds Transfer) and RTGS (Real Time Gross Settlement) were built for high-value, scheduled transfers. They were not designed for the "Sachet Economy" of India—where a citizen needs to pay ₹10 for a cup of tea or ₹50 for vegetables instantly.
ANANYA MISHRA (Wed,) studied this question.